Economist: B50 mandate may increase operational costs
The Executive Director of the Institute for Development of Economics and Finance (Indef), Esther Sri Astuti, stated that there is a potential for increased operational costs alongside the implementation of the mandatory 50 per cent biodiesel blend (B50).
Astuti noted that these costs would be necessary for vehicle engine maintenance, especially for older diesel engines that were not designed to use high-content vegetable oil blends.
“In heavy sectors such as mining, the use of fuel with high vegetable fat content risks increasing engine maintenance costs by up to 10 per cent,” Astuti said when contacted in Jakarta on Monday.
She also highlighted the hygroscopic nature of biofuels, which easily absorb water, necessitating strictly airtight storage to prevent damage or degradation in quality.
Nevertheless, she stated that the implementation of the B50 mandate also presents several advantages, including increasing the added value of palm oil commodities and strengthening national energy independence.
Astuti also noted that the policy would allow the government to halt massive diesel imports.
The Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated that the use of 50 per cent biodiesel is projected to reduce fossil fuel imports by up to 4 million kilolitres per year and save state foreign exchange by up to Rp157.28 trillion.
The increase in biofuel consumption resulting from this mandatory policy is also projected to absorb up to 2.21 million workers.
With the growing demand for palm oil as a key raw material for B50 production, Astuti urged for strengthened accountability in the management of the palm oil ecosystem.
Through the Ministry of Finance, the government has tasked the Indonesian Palm Oil Fund Management Agency (BPDPKS) to collect, manage, and distribute funds from palm oil export levies for industry development and farmer welfare, including through the Palm Oil Replanting Programme (PSR) and research and development of palm products.
“Support for palm oil farmers and the accountable distribution of funds must be continuously monitored to maintain the sustainability of the palm oil industry ecosystem from upstream to downstream,” she added.